AKZO NOBEL 2020-21 Annual Report Analysis

Wed, 31 Mar

AKZO NOBEL has announced its results for the year ended March 2021. Let us have a look at the detailed performance review of the company during FY20-21.

AKZO NOBEL Income Statement Analysis

• Operating income during the year fell 9.0% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 9.0% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 14.0% in FY21 as against 14.0% in FY20.
• Depreciation charges decreased by 4.4% and finance costs increased by 10.8% YoY, respectively.
• Other income declined by 36.4% YoY.
• Net profit for the year declined by 12.6% YoY.
• Net profit margins during the year declined from 8.9% in FY20 to 8.6% in FY21.

AKZO NOBEL Income Statement 2020-21

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Net Sales	Rs m	26,618	24,214	-9.0%
Other income	Rs m	376	239	-36.4%
Total Revenues	Rs m	26,994	24,453	-9.4%
Gross profit	Rs m	3,739	3,401	-9.0%
Depreciation	Rs m	790	755	-4.4%
Interest	Rs m	93	103	10.8%
Profit before tax	Rs m	3,232	2,782	-13.9%
Tax	Rs m	858	706	-17.7%
Profit after tax	Rs m	2,374	2,076	-12.6%
Gross profit margin	%	14.0	14.0
Effective tax rate	%	26.5	25.4
Net profit margin	%	8.9	8.6

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AKZO NOBEL Balance Sheet Analysis

• The company's current liabilities during FY21 stood at Rs 11 billion as compared to Rs 9 billion in FY20, thereby witnessing an increase of 15.2%.
• Current assets rose 13% and stood at Rs 17 billion, while fixed assets rose 4% and stood at Rs 22 billion in FY21.
• Overall, the total assets and liabilities for FY21 stood at Rs 40 billion as against Rs 37 billion during FY20, thereby witnessing a growth of 7%.

AKZO NOBEL Balance Sheet as on March 2021

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Networth	Rs m	12,380	12,883	4.1
Current Liabilities	Rs m	9,477	10,913	15.2
Long-term Debt	Rs m	0	0	0.0
Total Liabilities	Rs m	37,206	39,947	7.4
Current assets	Rs m	15,503	17,478	12.7
Fixed Assets	Rs m	21,699	22,462	3.5
Total Assets	Rs m	37,206	39,947	7.4

AKZO NOBEL Cash Flow Statement Analysis

• AKZO NOBEL's cash flow from operating activities (CFO) during FY21 stood at Rs 3 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY21 stood at Rs -2 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY21 stood at Rs -2 billion on a YoY basis.
• Overall, net cash flows for the company during FY21 stood at Rs -1 billion from the Rs 2 billion net cash flows seen during FY20.

AKZO NOBEL Cash Flow Statement 2020-21

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-20	Mar-21
Cash Flow from Operating Activities	Rs m	3,741	2,832	-24.3%
Cash Flow from Investing Activities	Rs m	44	-2,249	-
Cash Flow from Financing Activities	Rs m	-1,573	-1,737	-
Net Cash Flow	Rs m	2,212	-1,154	-

Current Valuations for AKZO NOBEL

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 45.6, an decline from the EPS of Rs 52.1 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 2,308.2, stands at 50.6 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 8.2 times, while the price to sales ratio stands at 4.3 times.
• The company's price to cash flow (P/CF) ratio stood at 34.3 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*
Sales per share (Unadj.)	Rs	584.5	531.7
TTM Earnings per share	Rs	52.1	45.6
Diluted earnings per share	Rs	52.1	45.6
Price to Cash Flow	x	31.7	34.3
TTM P/E ratio	x	42.2	50.6
Price / Book Value ratio	x	7.6	7.5
Market Cap	Rs m	93,699	97,229
Dividends per share (Unadj.)	Rs	14.0	50.0

Ratio Analysis for AKZO NOBEL

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 1.6x during FY21, from 1.6x during FY20. The current ratio measures the company's ability to pay short-term and long-term obligations.

Interest Coverage Ratio: The company's interest coverage ratio deteriorated and stood at 28.0x during FY21, from 35.8x during FY20. The interest coverage ratio of a company states how easily a company can pay its interest expense on outstanding debt. A higher ratio is preferable.

• Profitability Ratios

Return on Equity (ROE): The ROE for the company declined and down at 16.1% during FY21, from 19.2% during FY21. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

Return on Capital Employed (ROCE): The ROCE for the company declined and down at 22.4% during FY21, from 26.9% during FY20. The ROCE measures the ability of a firm to generate profits from its total capital (shareholder capital plus debt capital) employed in the company.

Return on Assets (ROA): The ROA of the company declined and down at 5.5% during FY21, from 6.6% during FY20. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*
Current ratio	x	1.6	1.6
Debtors’ Days	Days	54	62
Interest coverage	x	35.8	28.0
Debt to equity ratio	x	0.0	0.0
Return on assets	%	6.6	5.5
Return on equity	%	19.2	16.1
Return on capital employed	%	26.9	22.4

To see how AKZO NOBEL has performed over the last 5 years, please visit here.

AKZO NOBEL Share Price Performance

Over the last one year, AKZO NOBEL share price has moved up from Rs 2,200.8 to Rs 2,308.2, registering a gain of Rs 107.4 or around 4.9%.

Overall, the S&P BSE SENSEX is up 74.1% over the year.

(To know more, check out historical annual results for AKZO NOBEL and quarterly results for AKZO NOBEL)

Read: Latest Annual Report Analysis of AKZO NOBEL